Global debt growth returns to pre-crisis levels

Global debt burden is returning to pre-crisis levels as the Global Wealth Report released today shows debt growing at its fastest pace since 2007.

The report published by Allianz showed global debt growing by over four per cent last year - still not close to the soaring growth rate from before the financial crisis hit, but by far the fastest growth of the past eight years.

In the aftermath of the financial crisis, economic growth outpaced personal debt, but in 2014 debt and growth were once more neck-and-neck, as Allianz stated in the report:

This would suggest that the global deleveraging process that has been ongoing for a few years now is coming to an end.

Last year the global debt ratio, a measure of private household liabilities as a percentage of nominal economic output, remained roughly static to land at 64.4 per cent.

Broken down by region, Oceania’s personal debt per capita outnumbers that of Asia excluding Japan 30 times over.

But looking at how debt has grown since 2007 reveals that emerging markets are seeing debt soaring, with Latin America’s debt growing by 156 per cent and Asia excluding Japan up 151 per cent.

Meanwhile, North America is deleveraging and debt in Western Europe remains almost flat - albeit with major differences between individual countries, as the report notes:

Whereas personal debt is still on the decline in crisis countries like Greece, Ireland, Portugal or Spain, the Scandinavian countries, in particular, have already bounced back to - or indeed are still reporting - robust growth rates of 5 per cent or more.